Biggest earnings reports surprises

Analyzing which sectors outperformed analysts' expectations, and which fell short

Third-quarter earnings have been relatively disappointing with more than half the companies in the S&P 500 reporting so far. Andrew Wilkinson, chief economist strategist at Miller Tabak & Co., identifies some of the biggest surprises—both positive and negative—to emerge from this week’s flurry of reports.

Overall, revenue has missed expectations by 0.3%, although earnings surprised by 4.61%, according to the analysis (see chart below). The sales leaders are the energy and financial sectors, which are outdoing forecasts by 2.95% and 2.81%, respectively. The utilities sector, on the other hand, missed revenue projections by an average of 10.01%. This extends a losing streak for the utilities sector, which has seen average revenues miss analysts’ expectations for five straight quarters.

The financial and telecommunications services sectors are two of the biggest earnings surprises this month, with the former outstripping expectations by 11.23% thus far, and the latter beating predictions by 15.22% (although Wilkinson notes that the telecom sector has slightly weaker revenues).

The materials, IT and utilities sectors, on the other hand, fell short of earnings expectations, and industrials and health care missed target revenues by more than 1%. When the financial sector is removed from the equation (see chart below), Wilkinson notes that overall profits among the remaining companies fall to 2.54% and the revenue shortfall increases to -0.92%.